What are Margin Requirements?
Margin requirements have to do with the amount of funds that an investor must have in a margin account before being able to purchase investments on a credit or margin basis. The main function of these types of requirements is to prevent an investor from incurring a level of debt that he or she would not be able to repay. In the United States, the regulations that govern margin requirements are set by the Federal Reserve Board. Many other countries also have regulations in place that make it necessary to deposit funds into a margin account before an investor can trade on a margin or even sell short on a stock issue.
